Pakistan’s listed banks posted a combined profit of Rs170 billion in the third quarter of 2025 (3Q2025), reflecting an 8 percent year-on-year increase and a 2 percent rise from the previous quarter. This steady growth demonstrates resilience in the banking sector despite the ongoing challenging economic environment.
According to Topline Securities, the Net Interest Income (NII) for the banking sector improved by 6 percent year-on-year, although it remained largely flat compared to the previous quarter.
The year-on-year growth was largely driven by significant increases in NII at United Bank Limited (UBL), National Bank of Pakistan (NBP), and Bank of Punjab (BOP). UBL saw a remarkable 78 percent rise in NII, up Rs40 billion to Rs92 billion, while NBP and BOP reported growth of 74 percent (Rs26 billion to Rs61 billion) and 61 percent (Rs9 billion to Rs23 billion) respectively. However, excluding these three banks, the NII for the sector showed a 10 percent decline on a year-on-year basis.
On a quarter-on-quarter basis, NII remained relatively unchanged, as growth in some banks was offset by declines in others. Notably, Askari Bank (AKBL) saw an 11 percent increase (Rs2 billion), BOP’s NII rose by 9 percent (Rs1.9 billion), and MCB Bank (MCB) experienced a 3 percent increase (Rs1.3 billion). Conversely, Bank Islami (BIPL), Habib Metropolitan Bank (HMB), and Meezan Bank (MEBL) saw a decline in NII, with decreases of 16 percent, 9 percent, and 2 percent respectively.
Non-interest income for the sector rose by 13 percent year-on-year and 1 percent quarter-on-quarter, reaching Rs146 billion in 3Q2025. This slight improvement was attributed to capital gains realized by some banks and higher fee and foreign exchange (FX) income.
On the expense side, non-interest expenses increased by 19 percent year-on-year and 5 percent quarter-on-quarter, totaling Rs329 billion in 3Q2025. This was primarily driven by higher remittance-related costs. As a result, the sector’s Cost-to-Income ratio rose to 47.9 percent, compared to 45.9 percent in the previous quarter and 43.3 percent a year earlier.
The sector recorded a provisioning reversal of Rs3.1 billion in 3Q2025, a sharp contrast to the Rs26.9 billion provisioning charge in the same quarter of the previous year. This reversal indicates that banks are less concerned about loan book risks following a decline in interest rates.
The effective tax rate for the quarter stood at 53 percent, in line with 3Q2024 but down from 56 percent in 2Q2025, following changes in government taxation policies.
Despite facing challenges, Pakistan’s banking sector showed a resilient performance in 3Q2025, positioning itself for continued growth in the coming months.
